Automotive News - Traverse City - August 8, 2019 - 5

THURSDAY, AUGUST 8, 2019

AUTOMOTIVE NEWS CAR MBS DAILY

M&A gets pricey, so Varroc goes organic
New customers, production capacity key
Published July 15, 2019,
in Automotive News

Jim Henry

autonews@crain.com

arroc Lighting Systems
has gotten where it is today
by taking advantage of lucrative acquisition deals. But
the Plymouth, Mich., supplier - created when India's Varroc Group entered the segment by buying Visteon's U.S. lighting operations - has
a new game plan: It wants to rely on
organic growth.
CEO Stephane Vedie is shifting tactics this year to expand sales with
less reliance on mergers and acquisitions, which he said have become
too pricey.
"When you look at the current
business situation, you look at the
valuation of companies and they are
crazy-high right now," Vedie told
Automotive News. "It's a lot cheaper
to grow organically when you
can. We have
very much accelerated the organic growth in advance of what we
had planned."
Vedie's target is
annual sales of $2
Vedie: Ahead of
billion by 2022,
planned growth
roughly double
what it was for the fiscal year that ended March 31, 2018.
Doing that will be a combination of
deepening customer penetration,
overseas expansion, product enhancements - and also a touch of
M&A when the numbers make
sense, he clarifies.
But Vedie had been expecting additional acquisitions to deliver about
half of the business growth he wants.

Instead, Varroc is already on a pace
to reach $1.7 billion in annual sales,
and most of that increase over 2018
levels has come organically.
Non-U.S. sales are providing a major tailwind for the company, which
the diversified Varroc bought from
Visteon in 2012.
In May, Varroc opened a manufacturing plant in the Czech Republic to
produce rear lamps and front fog
lamps, with annual production capacity of about 1 million units. In
March, the company opened an r&d
office in Krakow, Poland, and at the
same time announced that it will

open another manufacturing plant
in Niemce, Poland, this year.
"We decided to launch in Poland
because we have a lot of organic
presence already in Central and
Eastern Europe, and in the Czech
Republic. This will be the main
growth site for us in Europe and in
Poland," Vedie said.
Varroc also opened a manufacturing facility in Tangier, Morocco, in
February to produce headlamps,
rear lamps and daytime running
lamps for its customers in Morocco
and Southern Europe, especially
Spain and France.
Last year, the company opened an
office in Tokyo, expanding a smaller

Non-U.S. sales
of its lighting
products are a
tailwind for Varroc.

presence in Japan, in part to provide
more local engineering support for
Japanese automakers. It also expanded an existing plant in Vietnam,
near Hanoi, with the intent of growing its car business. Previously, pro-

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Creating smart cities together.

duction there was
aimed at motorcycles.
Acquisitions
are
continuing where they
make sense. Varroc
last year acquired the
Turkish lighting supplier Sa-Ba Automotive. Besides giving
Varroc a factory near
Istanbul, the deal
came with a second
plant under construction in Bulgaria.
Under Varroc's ownership, the plant
opened in January, making smaller
lighting products, including center
high-mounted stop lights, fog lamps
and turn indicators.
m

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